Key facts
- European automakers are launching new models at the Paris motor show to counter rising Chinese competition.
- The EU and China have agreed to cap Chinese hybrid vehicle imports into the bloc at 350,000 per year.
- Chinese brands BYD, Chery, and SAIC's MG accounted for 90% of Chinese brand hybrid sales in the EU in the first eight months of 2026.
- Stellantis CEO Antonio Filosa described the EU-China deal as a 'good milestone' but sought further support on energy costs and emissions rules.
- Renault CEO Francois Provost stated the flood of Chinese hybrid imports is 'not sustainable' and the deal is 'better than a trade war'.
- Chinese automaker Changan is in talks to produce vehicles in Europe, aiming for its first European-made car in early 2027.
Europe's automotive industry is intensifying its response to growing competition from Chinese manufacturers with a surge of new model introductions at the Paris motor show, bolstered by recent EU support.
The European Commission has reached an agreement with China to limit the import of Chinese hybrid vehicles into the bloc, capping annual imports at 350,000 units. While the final details are pending, the arrangement was generally welcomed by European carmakers, though some expressed a need for additional assistance.
Stellantis CEO Antonio Filosa characterized the deal as a "good milestone" but also indicated the company is seeking relief from high energy costs from the Italian government and urged faster action on carbon emissions regulations from Brussels. Renault CEO Francois Provost described the influx of Chinese hybrid imports as "not sustainable" and deemed the agreement "better than a trade war."
Chinese automakers, including BYD and Chery, are significantly increasing their presence in Europe. Around 20 Chinese brands are exhibiting at the Paris show, double their representation from 2024, as they seek international growth amidst fierce domestic competition and softening demand at home. Chinese brands have rapidly gained market share in Europe over the past three years, with exports of hybrids to the EU tripling to $7.5 billion in the first half of this year.
Analysts at Jefferies noted that BYD, Chery, and SAIC's MG brand could be most affected by the EU-China deal, as they collectively accounted for 90% of Chinese brand hybrid sales in the EU during the first eight months of 2026. BYD stated the deal represents short-term pressure but reaffirmed its commitment to the European market.
Underscoring the challenges for established European manufacturers, Volkswagen reported a 14.3% decline in third-quarter deliveries, its steepest quarterly drop in four years, largely due to weakening demand in China. Deliveries also decreased in North America and Western Europe.
In its efforts to reclaim market share, Stellantis is introducing six new models and nine concept cars at the show. CEO Filosa unveiled an affordable electric version of the Citroen 2CV, calling it "the reinvention of a European icon." The company is also adopting faster development cycles, similar to Chinese manufacturers, and plans to build small EVs in Italy on a platform co-developed with China's Leapmotor.
Renault indicated it could boost EV production in France by at least 50% within the next 12 months. Chinese automakers like Changan are also exploring local production, with Zhao Fei, president of Changan, in talks about manufacturing vehicles in Europe and aiming for an early 2027 launch of its first European-made car. BYD is also considering building a factory in France, according to Executive Vice President Stella Li.